Teachable Brand AI – a new form of personalised retail customer experience?

Within the next five years, scalable artificial intelligence in the cloud – Brand AI – could potentially transform how retailers use personalisation to make every store visit a memorable, exclusive customer experience distinct from anything a competing digital disruptor could offer.

Arguably the success of this engagement approach is contingent upon a retailer’s ability to combine a range of data sources (such as social media behaviour, loyalty card history, product feedback) with its analytics capabilities to create personalised moments of delight in-store dynamically for an individual customer that drives their decision to purchase.

But could the truly disruptive approach be one where a customer is continually teaching the Brand AI directly about their wants or needs as part of their long-term personal relationship with a retailer?

Could this deliver new forms of customer intimacy online competitors can’t imitate? Here are some ideas…

  • Pre visit: Using an existing instant messaging app the customer likes (such as WhatsApp or Skype), he or she tells the Brand AI about their communication preferences (time, date, etc) and what content about a specific retailer’s products or services (such as promotions or new releases) they are interested in. This ongoing relationship can be changed any time by the customer and be pro-active or reactive – the customer may set the preference that the Brand AI only engages them when they are located within a mile of a retailer’s store or one week before a family member’s birthday, for example. Teachable Brand AI empowers the customer to be in complete control of their own personalised journey with a retailer’s brand.
  • In store: The Brand AI can communicate directly with in-store sales staff about a customer’s wants or needs that specific day to maximise the value of this human interaction, provide on-the-spot guidance and critical feedback about physical products their customer is browsing to drive a purchasing decision, or dynamically tailor/customise in-store digital experiences such as virtual reality or media walls to create genuine moments of customer delight. Teachable Brand AI has learned directly from the customer about what excites them and uses this deep insight to deliver a highly differentiated, in-store experience online competitors can’t imitate.
  • Post purchase: The customer can ask the Brand AI to register any warranties, guarantees or other after sales support or offers for their purchased good automatically. In addition, the customer can ask the Brand AI to arrange to return the good if unsatisfied or found faulty – to help ensure revenue retention a replacement or alternative is immediately suggested that can be exchanged at the customer’s own home or other convenient location. The customer can also share any feedback they want about their purchase at any time – Teachable Brand AI is driving customer retention and also gathering further data and insights to enable greater personalisation of the pre visit and in-store experience.

If you would like more information about how big data and analytics can benefit your organisation please contact the Sopra Steria Digital Practice.

 

Brand AI: The invisible omni-channel for retailers?

Digital can pose a range of risks for a bricks and mortar (B&M) retailer including:

  • Declining market share as customer loyalty to its established, traditional brand is eroded away by disruptive new on-line entrants and more innovative high street competitors
  • Poor ROI from implementing new in-store digital technologies because they fail to create a superior personalised customer experience across its physical and online channels
  • The inability to deliver better inventory management using big data and analytics due to immature organisational capabilities in these areas across its supply chain

So how could scalable retail artificial intelligence in the cloud – Brand AI – potentially turn these challenges into unique opportunities for competitive advantage during the next five years? Here are some disruptive ideas…

Brand AI as a personal human relationship

A retailer could personify its brand as a virtual customer assistant accessible anywhere, anytime using voice and text commands from a mobile device. But unlike today’s arguably bland, soulless smartphone versions that focus on delivering simple functionality, Brand AI would have a unique, human character that reflects the retailer’s values to inform its interactions and maturing relationship with an individual customer. Intended to be more than another ‘digital novelty’, this disruptive form of customer engagement builds on and enhances a B&M’s traditional brand as a trusted long-term friend throughout the entire customer journey by offering compelling, timely presale insights, instant payment processing and effective after sales support and care.

Brand AI as an invisible omni-channel

A customer is empowered to select what personal data they choose to share (or keep private) with the Brand AI to enrich their relationship. Social, location, wearable or browsing and buying behaviour data from complementary or even competing retailers could, potentially, be shared via its cloud platform. The Brand AI can analyse this liquid big data using its machine-learning capabilities to create dynamic real-time personalised actionable insights seamlessly across a customer’s physical and digital experience – it is the heartbeat of the retailer’s invisible omni-channel offering.

Critically, Brand AI can transform every retail store visit into a memorable, exclusive customer experience distinct from anything a competing digital disruptor could offer. For example, the Brand AI can advise in-store sales staff in advance what specific products a customer wants or needs that particular day to help personalise this human interaction, provide on-the-spot guidance and critical feedback about products available immediately to drive a purchasing decision, or tailor in-store digital experiences such as virtual reality or media walls to create genuine moments of customer delight. In addition, the AI can capture the customer’s emotional and physical reactions via wearables to these experiences (such as a raised heartbeat when seeing a new product for the first time). Such insights can then be explored later by the customer (including socially with family and friends) using the AI on the retailer’s integrated digital channel to sustain their retention.

Brand AI as an operating model

A further opportunity for using Brand AI is its potential ability to streamline inventory management to improve the customer experience and reduce operating risk. Key processes such as store returns and transfers could benefit from such an approach – not only would the invisible omni-channel AI enable a customer to easily raise the need to return goods, it can also capture the specific reasons why this is happening (rather than this information having to be interpreted by different customer service staff using prescriptive reason codes, for example). Also because the Brand AI has an established personal relationship with the customer it can proactively order a replacement for home delivery or pick up (store or other convenient location) or suggest a suitable alternative product or other cross-sell opportunities to keep the customer satisfied and minimise revenue losses for the retailer.

Managers can also use the AI to help interrogate and identify trends from this complex dataset on returns and transfers. Inventory management reporting and insights are available on demand in a manager or team’s preferred format (such as data visualisation) to support stock purchasing decisions, resolution of supply chain performance issues or investigate region or store specific fraud and theft. And because these analytics are running in the cloud they can be aligned to existing organisational capabilities in this area.

The illustrative benefits for a bricks and mortar retailer using scalable artificial intelligence in the cloud (Brand AI) potentially during the next five years include:

  • Refreshes the competitive advantages of an established, traditional high street retail brand using new disruptive forms of marketing and customer advocacy
  • Materially de-risks strategic investment in new in-store digital technologies by explicitly linking these capabilities to an holistic, long-term customer experience
  • Can improve organisational agility using big data and analytic capabilities to improve existing business processes that directly benefit the retailer and its customers

If you would like more information about how big data and analytics can benefit your organisation please contact the Sopra Steria Digital Practice.

The competitive advantages of Digital Elasticity

The time it takes from making a strategic or operational decision to its full implementation will directly impact an organisation’s competitive advantage. By leveraging digital ways of working and technology an organisation can potentially affect this process dynamically. So what are the strategic benefits of such Digital Elasticity?  Here are some ideas…

First Mover Advantage

Getting an innovative product or service to market first potentially confers a monopolistic position for an organisation that generates sustainably higher revenues than competitors. B2C markets, where customer switching costs are low (such as telco) or where governments are actively intervening to reduce barriers of entry to increase competition (like utilities and personal banking), are key battlegrounds to exploit such an approach.

Adopting a User Centred Agile approach to delivery or to change an organisation can enable First Mover Advantage capabilities. It should be noted that Agile isn’t necessarily faster or cheaper than a staged, gated Waterfall approach. However, it is far more responsive to changing market conditions because it drives the design and release of a product or service through a series of customer-focused iterations – rather than the “all at once” functional requirement focus typical of Waterfall. Consequently, an organisation can use the Digital Elasticity of User Centred Agile to get to market first and then use this approach to further enhance its offering dynamically to sustain profitability (and also create other barriers of entry for competitors).

The Digital Transformation challenges an organisation faces in embedding a scalable User Centred Agile approach across its value chain should not be underestimated. A key challenge is sustaining effective collaboration and alignment of pace (or velocity) between different, complex business areas of its operating model in an environment where these stakeholders’ goals may be materially divergent.

Second Mover Advantage

Exploiting the lessons learned from a competitor going to market first through imitating (or bettering) their design, pricing and brand positioning can be a source of sustainable competitive advantage. Players within the consumer electronics industry often demonstrate such competitive behaviour – for example, the fierce competition between next gen gaming consoles during the last couple of years, where rival companies played off each other’s hardware design, pricing information and launch date announcements to try to exploit Second Mover Advantages.

For an organisation choosing to delay going to market (by possibly months or even years) a key risk is the negative impact on its strategic (or non-current) assets. These under-utilised assets (such as IT property or equipment that drive its supply chain processes) will not generate revenue or value during this period but continue to generate costs and depreciation of commercial value. However, an organisation could lever Cloud Computing Capabilities to transform its IT asset base. Such a move transfers the risk of obsolescence of these assets to a third party while materially reducing operating costs. They should also become highly Digital Elastic through on-demand availability to enable Second Mover Advantages, and they shouldn’t create sunk costs or other liabilities like their on-premises equivalents.

This strategic move to be effective requires an organisation to select the right Cloud Services provider as a partner who can deliver these mission-critical capabilities competently short and long-term – successful Second Mover Advantage becomes contingent on “moving parts” beyond the direct control of an organisation.

Automatic Advantage

If Artificial Intelligence (AI) can live up to its promise to make effective business decisions using the complex data it rapidly consumes from potentially any source (including social media and Internet of Things sensors), an organisation could lever the Digital Elasticity of Automatic Advantage to eliminate human error, touch points or process bottlenecks to gain sustainable competitive advantage. An example could draw from usability testing data where an AI could make a design decision about a website and implement this change instantly to drive up conversion rates. Alternatively it could implement a new pricing strategy across all customer channels based on forecasted patterns of demand and anticipated competitive behaviour (AI algorithms are currently being tested as a way of predicting the stock market to help pilot such an approach).

Other applications could include the use of AI to apply Six Sigma or Lean approaches to eliminate defects or reduce wasted effort in manufacturing processes.

However, the Digital Elasticity of Automatic Advantage would mean an organisation accepting new forms of risk not previously encountered – such as who is accountable or responsible if the AI makes a bad business decision? How can tacit knowledge or experience gained by the AI be effectively shared with other systems or its human counterparts to drive sustainable competitive advantage? What are the implications for human resource talent management and retention within an organisation?

Despite these challenges however, the potential of an AI to make and implement informed strategic or operational decisions without the risk of “human delay or error” could potentially render First or Second Mover Advantages obsolete.

If you would like more information about how digital transformation can benefit your organisation please contact the Sopra Steria Digital Practice.